The commission proposes securing good jobs and increasing public investment in areas such as broadband.
Photograph: Bloomberg/Getty Images

The IPPR commission on economic justice sets out a 10-point plan to improve the British economy and make it fairer for its participants. The policy proposals include reviving trade unions in workplaces and raising the minimum wage. Here is a summary of the recommendations.

Reshaping the economy

The report calls for an activist government with an expanded industrial strategy, focused on spurring economic growth through investment in infrastructure such as transport links. The expectation is that this will improve Britain’s industrial base, drive up exports, raise productivity (the amount of economic output generated per hour worked) and address the regional imbalances in the UK economy.

The commission also proposes an industrial strategy act to set out clear goals and criteria for state support for industry, and create an independent industrial strategy committee to provide oversight and guidance. A national investment bank would invest in infrastructure and innovation, and over time should become the main mechanism through which government spends on industrial strategy.

Securing good pay and good jobs

The commission calls for an immediate increase of around £1 an hour in the government-mandated minimum wage, which stands at £7.83 per hour for over-25s, in order to bring it up to the levels of the “real” living wage. This is a voluntary measure adopted by companies including consumer goods firm Unilever, which is set at £8.75 an hour outside London and £10.20 an hour in the capital.

The role of trade unions is flagged by the commission. It says collective bargaining – union-led pay negotiations carried out on behalf of a workforce – is a route to higher productivity. Ministers should adopt a target of doubling the amount of collective bargaining in the UK economy to 50% of workers by 2030, with a focus on the lowest paid sectors.

Improving the private sector

The report calls for company directors to be given duties that go wider than just addressing the interests of shareholders. The commission believes that investors extract more cash from UK businesses than they put in through dividends and share buyback programmes, which holds back investment and improvements in productivity.

Promoting competition and protecting consumers

The remit of the competition watchdog, the CMA, should be broadened to include a focus on protecting the public from companies that become too powerful, alongside existing commitments to promote consumer welfare.

To arrest the growing power of Google, Facebook and other internet platforms, there should be a new regulator, the office of digital platforms, which will give the public greater access to their own data.

Increasing public investment

Public investment spending in areas such as broadband should be increased by at least £15bn over and above the latest government forecasts to 3.5% of GDP. This is the average level for economies in the G7 between 1997 and 2017.

The commission calls for a revised remit for the Bank of England that ties interest rates to the level of unemployment and economic growth, as well as inflation.

Strengthening the financial system

There should be a clampdown on borrowing by financial institutions to limit the damage to the City in a crisis, the commission says, adding that the government must go further in tackling tax avoidance and stopping illicit money flowing into Britain’s financial system.

The commission addresses the role of housing in banking speculation – a key cause of the 2008 crash – by calling for UK regulators to set a house price inflation target, which would enable the Bank of England to regulate property lending more closely.

Tackling wealth inequality

Sovereign wealth funds – state owned investment firms – are a feature of many emerging market economies such as China and Qatar, and developed ones such as Norway and New Zealand. The commission suggests setting up a sovereign wealth fund with the sale of Royal Bank of Scotland shares and gains from wealth taxes that could be worth £186bn in next 10 years. The fund would use its proceeds to pay 25-year-olds a lump sum of £10,000 as a “universal minimum inheritance”.

To build more homes, the government should allow local authorities to buy land prior to giving planning permission. This would reduce property speculation and allow councils to prioritise affordable homes.

Fair and simple taxes

Work and wealth should be taxed on the same basis with a new, single, income tax schedule for all types of income. This would mean the abolition of capital gains tax and dividend tax. It would tax the gains from wealth more heavily, the commission claims.

Replace business rates, which are levied on properties like shops, with a new land value tax. This would be a fairer tax than business rates, the report states. It would also force landowners to register and value their land, making ownership more transparent.

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Expanding on the government’s “clean growth” plan and the Climate Change Act, ministers would adopt a green industrial strategy to promote reducing carbon dioxide, increasing use of recycled materials and conserving natural habitats.

Devolution

The commission backs a new “economic constitution” for the UK, devolving more economic powers to the nations and regions through new economic zones for the north, midlands, south-west, and south-east of England.

It also calls for a £10bn state fund to help narrow the gap between the regions over a five year period. This would replace the £10.9bn due to be spent by the European Union on regional British development between 2014 and 2020.